What Makes A Business Valuable?

Summary

• When you want your business to grow, focus on making sure it keeps making more money in the future. Growth is key for a business to be successful and valued highly.

• Software companies are often valued high because they grow quickly, have high gross margins, and are very sticky, meaning customers stick around.

• A business, like an accounting firm, can be just as valuable as a software company if you figure out how to scale it quickly and efficiently.

• The secret to a valuable business is to focus on the core things an investor would want, such as growth, profitability, and customer retention. Make them feel confident they will get a good return on their investment.

• The way to make investors feel like your business is a sure bet is by building an amazing and solid business.

Video

How To Take Action

I would suggest focusing on your business's growth. Look at ways to steadily increase your income over time. This can start small. Maybe find more customers or offer new services. Make sure whatever you do is sustainable and can last over the long term.

A good way of doing this is by improving customer retention. Make your service so good that customers never want to leave. Think about what keeps people coming back, like excellent service or unique offerings. The more your customers stick around, the more reliable your income will be.

Also, focus on high margins. This means making sure the cost to deliver your service is way below what you charge your customers. It’s an easy win if you can figure out how to reduce costs without losing quality.

Now, let's make your business more appealing to investors. Show them your steady growth and strong customer loyalty. Investors like seeing businesses that are predictable and profitable.

Try to scale efficiently. This means growing without wasting resources or money. Use things like simple software tools or automation for repetitive tasks to save time and money.

By doing these things, you’ll be on your way to building an amazing business that investors want to get involved with. Remember, it doesn’t happen overnight, but steady, focused improvements make a big difference.

Full Transcript

people want a business to grow they want to make sure that it's not going to go anywhere and that it's going to keep making money or more money in the future like why are software companies worth a lot it's because and that's only if they are growing at a crazy rate they have high gross margins and often times a good software is very sticky and so the likelihood that that money continues and grows is high and so that's why people put big valuations on it's not that there's something magical about software versus an accounting business if you figured out a way to scale an accounting firm as fast as a software then it would be just as valuable and so it's really just boiling it down to the core things of what an investor would want and make it feel like it's an absolute sure bet that they're going to get amazing return on this thing which you really only get by building an amazing business